TaxTMI 
TaxTMI 
2018 (5) TMI 1537
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....ru Nanak Road, Bandra (W) along with open car parking spaces on 29.12.2010 for a total consideration of Rs. 8.21 crores. After reducing the indexed cost of acquisition of Rs. 68,78,480/- the long term capital gain from the sale of flat was shown at Rs. 7,52,21,520/-. However, the assessee claimed deduction under Section 54 of the Act on the total amount of long term capital gain amounting to Rs. 7,52,21,520/- towards purchase of a new residential flat at Khar. For verifying assessee's claim of deduction under Section 54 of the Act, the AO called for the necessary details and after perusing the details filed by the assessee found that the assessee has claimed deduction under Section 54 of the Act amounting to Rs. 7,52,21,520/- towards purchase of three separate flats and two garages in a building situated at RitwalCo.op. Housing Society, Khar (W), Mumbai by entering into separate agreements with different parties. On going through the sale deeds the AO found that the cost of investment in purchase of three flats amounted to Rs. 5,57,52,000/- and the cost incurred for purchase of two garages amounted to Rs. 1,06,50,000/-, total aggregating to Rs. 6,64,02,000/-. Thus, there is a diffe....
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....ats purchased by the assessee are located in different floors of the same building and have separate entrance and separate kitchens. Therefore, they cannot be considered as a single residential unit. Further, he observed that the assessee did not furnish approved plan of the Municipal authorities to demonstrate that the three flats are single residential unit having common entrance and common kitchen. In this context he relied upon certain decisions of the ITAT. Of course, he also upheld the view of the AO in disallowing assessee's claim of deduction under Section 54 of the Act in respect of garages and the expenditure incurred in repair and remodelling of the flats. 5. Dr. K. Shivaram, learned Sr. Counsel for the assessee submitted, before the AO assessee has furnished a plan of the architect and other relevant evidences to demonstrate that though the assessee has purchased three flats from three persons, however, he has converted all the three flats to a single residential unit with a common entrance and common kitchen. He submitted, to verify the claim of the assessee the AO made a physical enquiry through the Inspector of Income Tax, who had submitted a report stating that the....
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.... under Section 54 of the Act. In support of such contention learned counsel for the assessee relied upon the following decisions: - i) M/s. Penelope Ann Dos Remedios vs. ITO ITA No. 7928/Mum/2010 dated 06.09.2013 ii) ACIT vs. Smt. Usha B. Madan ITA No. 4258/Mum/2011 dated 13.06.2012 Finally, learned Counsel submitted, the assessee having incurred expenditure of Rs. 88,19,520/- in remodelling the new residential flat, it is part of the cost incurred for the flat, hence, is to be allowed as deduction under Section 54 of the Act. 6. The learned Departmental Representative strongly relying upon the observations of the learned CIT(A) submitted that neither before the AO nor before the First Appellate Authority assessee was able to demonstrate that the three residential flats purchased by him were in fact a single residential unit having common entrance, common kitchen, etc. He submitted that the learned CIT(A), after verifying the facts and material on record has given a categorical finding that not only the flats were purchased separately under three different agreements but they are located in different floors of the same building. He submitted, though the CIT(A) called for floo....
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....ght on record to show that they have been converted into a single residential unit, assessee's claim of deduction under Section 54 of the Act in respect of all the three flats cannot be allowed. In this context, though, learned counsel for the assessee has submitted before us that during assessment proceedings the AO has conducted physical enquiry through Inspector and has found that the three residential flats have been converted to one residential unit having common entrance, common kitchen and internal staircase,however, no such observation of the AO is forthcoming in the assessment order. Even, the enquiry report of the Inspector, if at all there is one, has not been submitted before us. Of course, learned Counsel for the assessee has submitted before us the plan of the architect, which was claimed to have been produced before the CIT(A). Besides that, a letter dated 29th January, 2018 issued by the Housing Society is sought to be produced by way of additional evidence. In the said letter it has been stated that permission has been granted to the assessee to convert all the three flats into one residential unit having a single kitchen and private staircase. In our considered op....